First Thoughts: Good news, bad news in averting the fiscal cliff

Top Talkers: The Morning Joe panel – including Today's Willie Geist, Mike Barnicle, and New York Magazine's John Heilemann – talk about how Republicans are backing away from Norquist tax pledge and where key Washington players stand on negotiations on the fiscal cliff.

Good news, bad news in averting the fiscal cliff… A potential compromise?... More GOPers say they’re willing to break Norquist’s tax pledge… Team Obama gets its cease fire in Gaza… McCain softens his criticism of Susan Rice… And Shelley Moore Capito and the potential 2014 retirees.

By Chuck Todd, Mark Murray, Domenico Montanaro, and Brooke Brower

*** Good news, bad news in averting the fiscal cliff: With Congress returning from its Thanksgiving break, here’s the good news for those looking to avoid the upcoming so-called “fiscal cliff”: Members of both parties do agree on one LARGE point -- taxes for the wealthy should go up. “It's fair to ask my party to put revenue on the table. We're below historic averages,” Sen. Lindsey Graham (R) said on ABC yesterday, adding: “But to do this, I just don't want to promise the spending cuts. I want entitlement reforms.” And, as it turns out, some Democrats are willing to look at some entitlement reform. “We can make meaningful reforms in Medicare and Medicaid without compromising the integrity of the program, making sure that the beneficiaries are not paying the price for it, except perhaps the high-income beneficiaries. That to me is a reasonable approach,” Sen. Dick Durbin explained on ABC. But here’s the bad news: The two sides can’t agree on how to raise the taxes on the wealthiest. Democrats are adamant that the Bush tax cuts must expire for them (which would raise their tax rate), while Republicans insist that rates can’t increase.

Roger L. Wollenberg / Getty Images

House Minority Leader Nancy Pelosi (D-CA), Senate Majority Leader Harry Reid (D-NV), Speaker of the House John Boehner (R-OH), and Senate Minority Leader Mitch McConnell (R-KY) speak to the media at the White House on November 16, 2012 in Washington, DC.

*** A potential compromise here? Both Democrats and Republicans point to poll numbers to bolster their argument over the rates. In the national exit poll, a combined 60% of voters in the presidential election said that income tax rates should either increase for all or on income above $250,000; just 35% said tax rates shouldn’t increase for anyone. In addition, a new CNN poll finds that two-thirds of adults (67%) believe that deficit reduction should come from a mix of spending cuts and tax increases. But according to a survey conducted by Republican pollster David Winston, 61% say the better way to raise revenue is through closing loopholes and reforming the tax code; only 28% said the better way is through raising tax rates on those making $250,000. (As with all polling, it matters how you word the questions.) Yet over the holiday weekend, the New York Times mentioned one possible compromise here: “allow effective tax rates to rise for the wealthy without technically raising the top tax rate of 35 percent.” Per the Times, “One possible change would tax the entire salary earned by those making more than a certain level — $400,000 or so — at the top rate of 35 percent rather than allowing them to pay lower rates before they reach the target, as is the standard formula.”

*** Willing to break Norquist’s pledge: The other “fiscal cliff”-related development over the long holiday weekend was that more Republicans said they were willing to break Grover Norquist’s pledge not to raise taxes, National Journal writes. “I think Grover is wrong when it comes to ‘We can't cap deductions and buy down debt,’” Lindsey Graham said on ABC. “I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform.” That followed these comments from Sen. Saxby Chambliss. "I care more about my country than I do about a 20-year-old pledge." But here’s the thing: These statements are coming from Senate Republicans, not House Republicans who have to worry more about primaries than general contests. The exception here is Rep. Peter King (R-NY), who said on “Meet the Press”: “I agree entirely with Saxby Chambliss: A pledge you signed 20 years ago, 18 years ago, is for that Congress... I think everything should be on the table.” Then again, Peter King isn’t your typical House Republican. Folks, don’t get caught up in the Conventional Wisdom trap of the Senate. Right now, these senators are nothing more than elected pundits. The talks are between the White House and House Republicans.

*** Team Obama gets its cease fire Gaza: Before we departed for the long Thanksgiving weekend, we wrote that the Obama administration needed to get a negotiated cease fire between Israel and Hamas ASAP, because a full-blown war in Gaza wouldn’t have been a good development for anyone. Well, as it turns out, Team Obama got exactly that -- a negotiated cease fire -- after it dispatched Secretary of State Hillary Clinton to the Middle East. So getting the cease fire was a big deal. The complicating factor, however, is that the U.S. partner in brokering the cease fire, Egyptian President Morsi, is now facing some serious problems in his own country. The New York Times: “Cracks appeared on Sunday in the government of President Mohamed Morsi of Egypt, as he faces mounting pressure over his sweeping decree seeking to elevate his edicts above the reach of any court until a new constitution is approved.” The leadership may be new in Egypt, but the complications for the U.S. remain the same: The Egyptians are needed to broker any peace in the Middle East, but does the price of working with them come with having to overlook how the leader governs at home?

*** McCain softens his criticism of Rice: And speaking of secretary of state, Sen. John McCain appeared to soften his critique on potential Hillary Clinton successor Susan Rice. “I'd give everyone the benefit of explaining their position and the actions that they took. I'd be glad to have the opportunity to discuss these issues with her,” McCain said on FOX yesterday. Of course, this doesn’t mean that any Rice hearing would be less contentious or that Benghazi wouldn’t be an issue. But it does seem -- for now at least -- that Benghazi might not be fatal for Rice, if Obama nominates her. The White House is going to get a Benghazi proxy fight at some point in the Senate, perhaps it’s during the Rice confirmation, or perhaps during the confirmation of a new CIA director, or maybe it’s all unavoidable giving the president the leeway to go with Rice without fear of creating a NEW political problem for himself on the Hill. By the way, the State job is down to Rice and John Kerry; there really isn’t a third contender being vetted, we’ve learned. And look for an announcement about State to happen in the next week or so.

*** Shelley Moore Capito and the potential 2014 retirees: Lastly, looking ahead to the 2014 midterms, Senate Republicans got some good news: Rep. Shelley Moore Capito will today announce she’s running for the U.S. Senate in West Virginia, per Roll Call. To us, this may be an indication that incumbent Sen. Jay Rockefeller (D), 75, probably won’t seek re-election. And retirements could be a big story for Democrats in 2014, with potential retirees in Rockefeller, Tom Harkin (IA), Dick Durbin (IL), Max Baucus (MT), Tim Johnson (SD), and Carl Levin (MI). Then again, with Democrats likely to hold the Senate for a couple of cycles now, will these veteran senators decide they enjoy their committee gavels too much to retire?